Posts Tagged ‘#fraud’

On July 2, 2018, the Third Appellate District of California awarded Pacific Gas and Electric Company (PG&E) its first critical victory in defending itself against fire claims caused by its power lines: Butte Fire Cases, (2018) 24 Cal. App. 5th 1150. In 2015, the “Butte Fire” started after a gray pine came into contact with one of PG&E’s power lines, burning more than 70,868 acres, damaging hundreds of structures, and claiming two lives. The subsequent lawsuits, which were consolidated in a judicial council coordinated proceeding in Sacramento Superior Court, are comprised of 2,050 plaintiffs who sought punitive damages under Civil Code § 3294.

The master complaint alleged that the utility company and two contractors failed to properly maintain the power line and adjacent vegetation, warranting punitive damages. The Third Appellate District disagreed, striking Plaintiffs’ prayer for a punitive damages award.

In California, punitive damages may be recovered under section 3294 “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” (Civ. Code § 3294) Malice is defined by section 3294, subdivision (c)(1) as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.”

In seeking summary adjudication, PG&E submitted evidence that it devotes significant resources to vegetation management programs intended to minimize the risk of wildfire, spending more than $190 million per year on vegetation management operations. The operations include routine annual patrols, quality assurance and control programs, and a public safety and reliability program. PG&E also contracted with ACRT, Inc. to conduct inspections and vegetation management, Quantum Spatial, to collect data using LiDAR to identify dead or dying trees, and Trees, Inc. to trim noncompliant trees. No inspections identified the subject tree as a danger.

The Third District was unpersuaded by Plaintiffs’ contention that PG&E’s vegetation management program was “window dressing”, PG&E’s vegetation management methodologies were defective, or that PG&E evinced a cavalier attitude towards public safety evidenced by the infamous San Bruno pipeline explosion and a 1994 “Rough and Ready” fire caused by PG&E.

Plaintiffs failed to demonstrate the existence of a triable issue of material fact that showed PG&E acted despicably, or with willful and conscious disregard for the rights and safety of others. PG&E’s nondelegable duty to safely maintain the power lines does not alter the analysis of punitive damages under § 3294. There was nothing despicable in the utility company’s assumption that contractors were training their employees as required, and any criticisms of PG&E’s methodologies do not amount to clear and convincing proof that PG&E acted with malice. At most, plaintiffs’ evidence showed mere carelessness or ignorance.

If you have any questions, or would like more information, please contact Carlos Martinez-Garcia at [email protected].

The Eleventh Circuit recently held that an insured could not recover $10.7 million in losses under a computer fraud policy covering losses “resulting directly from” the use of a computer to fraudulently cause a transfer of funds.

In Interactive Communs. Int’l, Inc. v. Great Am. Ins. Co., 2018 U.S. App. LEXIS 12410 (11th Cir. May 10, 2018), the Eleventh Circuit held that, under Georgia law, “one thing results ‘directly’ from another if it follows straightaway, immediately, and without any intervention or interruption.” Id. at *12. In doing so, the Eleventh Circuit rejected the insured’s argument that “resulting directly from” means proximate cause, and that the mere fact that computer fraud set into motion a chain of events that led to the insured’s loss was sufficient to establish coverage. Because there were several steps between the computer fraud (fraudulently redeeming same debit card “chits” multiple times) and the loss sustained when money was transferred from a bank account controlled by the insured to a merchant to cover the fraudster’s debit card purchase, and there was a lack of immediacy between the computer fraud and the loss, the Eleventh Circuit held that the insured’s loss did not “result directly from” computer fraud. Id. at *14-15.

A growing number of courts around the country likewise have held that “resulting directly from” and similar language in computer fraud, funds transfer fraud and similar computer crime policies requires an immediate link between the covered event and the loss. However, courts in some jurisdictions, including New Jersey, Pennsylvania and Ohio, have held that such language only requires that the covered event be a proximate cause of the loss. Insurers reviewing claims under computer fraud, funds transfer fraud and similar computer crime policies requiring that a loss “result directly from” a covered event (or similar language) should confer with coverage counsel regarding whether the relevant jurisdiction requires an immediate link between the covered event and the loss and (if so) whether the circumstances of the claim satisfy this requirement.

If you have any questions or would like more information, please contact Bill Buechner at [email protected].

On May 11, 2018, U.S. Citizenship and Immigration Services (USCIS) and Department of Justice (DOJ) entered into a Memorandum of Understanding regarding information sharing and case referrals. USCIS and DOJ state that this effort is meant to improve the way the agencies share information and collaborate on cases “to better detect and eliminate fraud, abuse and discrimination by employers bringing foreign workers to the United States.” The Memo allows the agencies to share information and help “identify, investigate and prosecute employers who may be discriminating against U.S. workers and/or violating immigration laws.”

This Memo has been entered into by the agencies in the spirit of “Buy American and Hire American” Executive Order issued by President Trump. This new collaboration most likely will lead to more audits, site inspections and requests for evidence and create a difficult path for foreign workers and their employers.

For additional information related to this topic and for advice regarding how to navigate U.S. immigration laws you may contact Layli Eskandari Deal of the law firm of Freeman Mathis & Gary, LLP at (770-551-2700) or [email protected].

They say everybody does it.Embellishing your resume to get a job, attract business or get ahead in this highly competitive world.Well, if you work in the financial services industry and are trying to attract customers to invest their money with you, you better think twice.The S.E.C. is highlighting their efforts to crack down on overstated credentials and warning potential investors that overstated credentials are a red flag for fraud.

On June 4, 2015, the S.E.C. issued “Invest Alert: Beware of False or Exaggerated Credentials”.Although the investment alert is directed at potential investors, it is a shot across the bow for investment advisors, registered representatives, investment advisory firms and broker-dealers generally.The S.E.C. is cracking down.They want potential investors to check your credentials and if the potential investors cannot confirm what you claim …. call the S.E.C.… so they can launch a fraud investigation.

The S.E.C. Alert highlights five recent proceedings where the S.E.C. has included, within their charges, allegations relating to overstated credentials.These include:

falsely touting that the advisor was a “Top 25 Rising Business Star;”

falsely claiming to have graduated from the University of Maryland;

falsely holding yourself out as a certified financial planner;

over-emphasizing appearances on financial media shows; and

using Linked In, Twitter, Facebook and other social media accounts to inaccurately bolster the credentials of the financial advisor.

The cases referenced by the S.E.C.in their Alert involved actual fraudulent conduct, but it is probably only a matter of time before the S.E.C. punishes an embellisher despite the complete absence of fraud.Moreover, there are a host of regulatory actions short of a formal action that the S.E.C. or other regulators can initiate short of a formal action.

Fraud definitely exists; and fraudsters definitely will say anything to further perpetuate their fraudulent activities.Diligence is important and customers should be cautious.Thus, honest financial advisors have to be extra careful to only tout credentials that they can document and prove are legitimate.Unfortunately, this is going to be a case by case exercise and financial advisors will need to closely monitor how the S.E.C. proceeds with its anti-embellishment enforcement actions.

The time, expense and inconvenience of a regulator (or a customer) challenging an embellishment on your resume is simply not worth the risk (or the cost).So take a look at your resume.Review your website and your marketing materials.No more stretching the limits.It may make the marketing a little harder, but that is much better than the headache of a regulator challenging your resume.